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Dynamic capabilities and governance: An empirical investigation of financial performance of the higher education sector
Author(s) -
Heaton Sohvi,
Teece David,
Agronin Eugene
Publication year - 2023
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.3444
Subject(s) - corporate governance , flexibility (engineering) , business , autonomy , discretion , accounting , resource (disambiguation) , economics , public sector , control (management) , finance , management , political science , computer network , economy , computer science , law
Abstract Research Summary We postulate that resource allocation decisions consistent with dynamic capabilities can improve financial performance, but that governance moderates the relationship between resource allocation flexibility and financial performance. Using more than a decade of data on US public universities, we find that flexibility has much more impact when matched by lower levels of governance that allow greater expenditure autonomy for university executives and administrators. Managerial Summary Organizations are increasingly subject to conflicting demands imposed by their institutional environments. Given the importance of governance arrangements, we apply strategic management concepts to public universities and investigate the effect of external governance arrangements on university performance. We show that universities that reallocate resources more regularly are more likely to run larger budget surpluses. This is far more likely to be true at universities where external governance arrangements allow greater executive discretion.